Last Updated on 3 February 2021 by F.R.Costa
In my daily activities I use some applications to help me conduct research, analyse markets and invest. Let me tell you what I use.
A few years ago, when conducting research at the Faculty level, I was shocked when I found that a simple spreadsheet was to enough! I have good spreadsheet skills, but the amount of financial data can easily turn overwhelmingly to the point of making a spreadsheet pretty useless. If you just want to analyse a few stocks, it may be good to go with it, but if you want to work with an entire market, it isn’t. Additionally, you don’t want to start over every time you change a parameter or select a different dataset. To better deal with this, you need programming knowledge and a decent application that allows scripting.
But, let’s start from the beginning…
Before anything, we need financial data. It is, in general, available at a few free online sources. Yahoo Finance is a good example. They provide a great amount of free data, including historical price data that can be downloaded or retrieved using an API code. However, not all data provide by Yahoo is manageable and then I usually find it more tedious to collect the data I need than to work on it in order to get the output I want.
To surpass this difficulty, I found that paying may be the best way to go, for someone that deals with data everyday. Thus, I subscribed Sharescope a few years ago. The British company supplies an excellent piece of software, which covers stocks from many markets, ETFs, Bonds, FX, Commodities, among other instruments. It allows to build portfolios, keep track of them, and filter data using dozens of filters. Sharescope provides a versatile version of its software – Sharepad – which runs from a browser and then allows me to deal with financial market data in a Linux machine (as I’m not really a Windows guy). You can also use it on an Android tablet/phone or iPad/iPhone.
I use Sharepad to export the graphs I need to support my writing and to create quantitative strategies using filters. Let’s say that I want to create a quantitative strategy targeting value stocks. What I do is creating a set of filters that I believe are good proxies for value, like the EBIT Yield or the Price-to-Book ratio and then sort stocks according to a set of criteria to select the top positions and create a portfolio. I like Sharepad because it is much better than most free online resources, helps me build a faster workflow and comes at a nice monthly price. You can subscribe it monthly by around £30. I’m not affiliated with the company in any way, but I suggest it here because I’m using it from long ago and found it very useful to my workflow. So, if you want to give it a try, you can visit the Sharescope website and evaluate by yourself. There are many other paid applications out there, but I feel that most of them are more expensive and do less than Sharescope. In any case, this is just a personal opinion, biased from my extensive use of Sharescope across the years.
Now comes the second part…
Many times, I want to deal with large datasets and do “pretty nasty things” with them! To be sure that I can easily identify any errors and adapt the workflow as needed, I use an econometric analysis application. I tried several and stopped fishing when I found Gretl and its native Hansl language. I also use the Python language at times, but there’s still a road ahead for me before I can really master Python.
Why not R? Well, in the perspective of a Linux guy, R seems unnatural and difficult to learn. I know that many people would insult me for saying that, but I believe that Python and Hansl are much more predictable and intuitive than R is. Most people working with financial data prefer R because it is very versatile and has the largest community. Most likely, if you need something, you don’t need to write it when using R, because someone eventually did it already and is sharing it in the community. However, Gretl is very easy to learn and has the flexibility of providing a GUI at the same time it allows for scripting (using the Hansl language). The community is small but knowledgeable and the software is very well documented. I found myself doing almost all research and analysis work through Gretl over the years. I am always building a script here and there and I’m not a programmer!
Gretl is a cross-platform application and is open-source software. I want to make sure that, if I spend time learning a language, it is open-source. That’s a good reason to avoid things like Stata or Matlab (in my view, of course). If you want to try, you can check Gretl website.
Apart from Sharescope/Sharepad and Gretl (or Python) I use spreadsheets. Since I’m on Linux, I use LibreOffice Calc and Gnumeric which are both open-source software. Microsoft Excel will do the same for you on Windows, even though at a price.